A COMPARATIVE ANALYSIS OF COMPETITION LAWS AMONG EU, JAPAN AND CHINA
Author: Rama Gandhi, NMIMS School Of Law
In recent years, many of the countries follow suit to implement competition law. Are there any differences with regards to the intention to implement competition law? Are they driven by similar lines of reasoning? Many of the previous research shed light on one or two countries reasons for implementing competition law. This article compares and contrasts the similarities and differences with regards to the major motives in implementing competition laws/antitrust laws. We first used content analysis to categorize the reasons for implementation of competition law. After that, the reasons mentioned by official websites and academic journals which lead to the implementation of competition laws in different countries like EU, Japan and China is done.
If both businesses behave optimally, a reasonably competitive business balance occurs. The first main theorem of social security has indicated the utility of open, sustainable markets (Lloyd 1998). However, it prevents competitive conduct in the real world because we are not fully aware of competition and markets. With consumer strength rising in dominant retailers, retail consolidation is increasing in many advanced economies. Vertical convergence is also seen as hindering rivalry by encouraging businesses to hurt their rivals and acquire market control. Global business convergence also leads to high pressures and a decline in competitive rewards (Calliess and Mertens 2011).
To this end, a major monopolist corporation has been appealed to various persons to take steps in imposing guidelines and rules of competition to discourage business growth. Competition law, also known as China’s monopoly law and US antitrust law, smooths the mechanism of competition in the industry and creates a good atmosphere for companies. Competition legislation is usually enforced to regulate such practices that are detrimental to the business economy. It also encourages competition and impedes the abuse of their business forces by big firms. Competition policy offers incentives for creativity, increases consumer health through promoting competition, improves standards of facilities, guarantees fair playing grounds and lowers costs for goods. Both of them contribute to the effective transfer of wealth within our society.
EU competition policy comes from three distinct sources: The European Coal and Steel Community, drafted by an American on assignment with occupation forces in Germany, were an amalgam of the US antitrust. Article 65 of the ECSC Treaty forbade agreements which impede competition. Article 66 of the ECSC Treaty established the strictest merger control in the world. European Economic Community competition policy was built upon the experience of ECSC competition policy which was influenced by the US.The easiest way to delegate capital and give customers more options is to provide equal competition. It eliminates the misuse of monopoly control, counteracts rivalry and guarantees that the areas of competition are balanced. It prevents smaller businesses from larger companies’ competition. However, in the case of Intel, the regulation of EU antitrust legislation played more important political considerations than economic ones. A big problem is the regulation of monopoly pricing. The result is thus that the promotion of public interest is not the main explanation that it is appropriate to enforce competition law.
Competition legislation is targeted at encouraging competition in many Asian countries. In order to defend and encourage innovation, for example, the Regulation on Fair Trade Practices was adopted on 26 October 2005. It specified that the business operator must not maintain the purchase or selling of prices or unreasonably set the prices of goods or services; allows business operators to limit the purchase or output of goods or to restrict the sale or distribution of goods, accept or supply services or obtain credits of other business operators, or directly or indirectly; Section 26 does not involve firms that result in monopoly or unfair market company operators.
In Japan, the name of the existing competition law is the Anti-Monopoly Act. The department that oversees this law is Sukuzi, 2002. The Anti-Monopoly Act prevents the existence of large-scale conglomerate. Whereas, in China, it is called the Anti-Monopoly Law as in governed by the Central People’s Government of the People’s Republic of China. It prevents and stops monopoly behavior, protects fair competition, increase economic efficiency, ensures consumers and society benefit, enhances the healthy development of socialist market economy.
Previous literatures suggest that competition law ensures competitiveness and competition in the market. Despite all the three countries implement com-petition law to protect consumers, the literatures have different opinions on the reasons for implementing competition law. Consumer welfare is one of the common reasons. Asian countries like China and Japan, consider antimonopoly as strong reason for implementing competition law and efficiency as one of the major reasons which is different from the EU. Efficiency is one of the main reasons in Asia but it is of less importance in EU. It can be conjected that it is due to the difference in level of economic development. In the EU, whist many of the European countries locate in the Eastern side of Iron Curtain are developing countries, the Western side are wealth and well-developed.
With regards to official reason of why competition should be implemented, EU, China and Japan’s official reasons for implementing competition laws, show that many countries implement it for consumer to enhance competition. Nevertheless, unlike the academic research articles on EU and Asian countries, the number of official documents which stress on consumer and fairness is less than competition. Efficiency, works against monopoly/antimonopoly are also some of the common official reasons for implementing competition law.
Lloyd, P. J. 1998. “Multilateral Rules for International Competition Law?” The World Economy 21: 1129–1149.
Calliess, G. P., and J. Mertens. 2011. “Transnational Corporations, Global Competition Policy, and the Shortcomings of Private International Law.” Indiana Journal of Global Legal Studies 18: 843–872.
Matsui, K. 2010. “Returns Policy, New Model Introduction, and Consumer Welfare.” International Journal of Production Economics 124: 299–309.